Brokerage : Mirae Asset Securities
Analyst : Jun-seo Park
Investment Rating : BUY (Maintained)
Target Price : KRW 200,000 (Raised)
Core Momentum : Entering the seasonal IT upcycle alongside MLCC utilization reaching 90% in Q3, combined with structural substrate expansion from commercial AI PC launches, is projected to accelerate earnings growth.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Valuation Basis: Raised to KRW 200,000 (applied a target P/B of 1.8x, matching the 5-year historical average, to 2024F BPS of KRW 112,524).
- Investment Rating: BUY (Maintained)
- Stock Data (As of July 2, 2024): Current Price KRW 153,800, Market Capitalization KRW 11.49 Trillion, Foreign Ownership 33.2%
- Key Financial Forecasts (2023 → 2024F → 2025F):
- Revenue: KRW 8.91 Trillion → KRW 9.99 Trillion → KRW 10.58 Trillion
- Operating Profit: KRW 639.0 Billion → KRW 830.0 Billion → KRW 1.01 Trillion
- Net Profit (Controlling): KRW 423.0 Billion → KRW 679.0 Billion → KRW 804.0 Billion
- EPS: KRW 5,450 → KRW 8,747 → KRW 10,358
- PER / PBR: 28.1x / 1.5x → 17.6x / 1.4x → 14.8x / 1.3x
- ROE: 5.5% → 8.3% → 9.0%
🚀 2. [Market Opportunities & Business Outlook]
- Q2 2024 Outlook:
- Consolidated revenue is projected at KRW 2.33 Trillion (+4.9% YoY) and operating profit at KRW 207.6 Billion (+1.3% YoY), slightly below consensus due to persistent Japanese Yen weakness.
- Q3 2024 Earnings & Utilization Ramp-up:
- Q3 2024 revenue is forecast at KRW 2.51 Trillion (+6.5% YoY) and operating profit at KRW 257.6 Billion (+40% YoY), raised by +0.2% and +7.8% respectively versus previous estimates.
- MLCC capacity utilization is expected to climb steadily from 80% in Q1 2024 to 85% in Q2 2024, and reach 90% in Q3 2024.
- Growth is supported by a confluence of three factors: IT seasonality, sustained growth in automotive MLCC, and surging industrial MLCC demand from AI proliferation.
- AI PC Wave & Package Substrate Growth:
- Substrate division enters a full-scale growth cycle as AI PC launch volume expands from June, further boosted by the Windows 10 end-of-support replacement cycle in 2025.
- The global AI PC market is projected to expand at a CAGR of +59% from 2023 to 2027, reaching a 49% market penetration rate by 2027.
📝 Editor’s Comment (Perspective)
The analyst views Samsung Electro-Mechanics not as a legacy supplier constrained by maturing smartphone demand, but as a primary beneficiary entering a structural upcycle across both MLCC and substrate divisions driven by rising AI on-device penetration (such as AI PCs) and expanding industrial/automotive applications. The overarching perspective places greater significance on the tangible earnings recovery driven by 90% utilization and new AI hardware adoption than on short-term FX headwinds.
To assess the progression of this investment thesis moving forward, verification should focus on whether MLCC capacity utilization stably reaches 90% in Q3, whether AI PC launches translate into sustained revenue and profit gains in the package substrate division, and whether automotive and AI-driven industrial MLCC continue their multi-year expansion. These milestones can be monitored through upcoming quarterly earnings releases, investor relations presentations, and periodic financial filings.
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